5:10 p.m. PDT: Lucas’s appearance is prefaced by a short film showcasing Industrial Light and Magic’s special effects work. “Star Wars.” “Titanic.” “Mask.” And many others. Truly an impressive reel.

5:15 p.m.: Some introductory conversation and we’re presented with another clip about the development of the maelstrom effect in “Pirates of the Caribbean 3.”

And on to the demo. Jim Ward, president of LucasArts, takes the stage.

5:20 p.m.: Ward describes Lucas’s mandate to re-imagine the role of story and character in video games: “We need video-game characters with a central nervous system.”

More video clips follow, all of them showcasing artificial-intelligence-driven character behavior. LucasArts calls this technology “euphoria,” a behavioral-simulation engine that attempts to recreate real-life reactions to various stimuli. According to LucasArts: “For the first time ever, euphoria enables interactive characters to move, act and even think like actual human beings, adapting their behavior on the fly.”

5:25 p.m. Another demo in which “Star Wars” robot R2D2 is hurled through a variety of materials–wood, glass–all of which fracture and break as they would in real life.

Another aspect of LucasArts’ pursuit of real-life simulation is Digital Molecular Matter by Pixelux Entertainment. DMM was designed to bring another layer of realism to next-generation video games. From tumbling walls to shattering glass to undulating plant life, objects rendered by DMM have material properties that, according to LucasArts, will “behave” realistically in real time without the use of animation: “Rubber bends. … Glass shatters. Crystal fractures. Carbonite (yes, the very alloy that encased Han Solo) dents.”

Back to Lucas: Walt wonders if there are applications for this beyond gaming. Lucas doesn’t seem to have considered it much. He’s focused on games and film: “Everything we do is geared toward creating better simulations.”

5:30 p.m. Given advances like the ones we’ve just seen, what does this mean for animators? Lucas says we’ll always need them. Euphoria and Digital Molecular Matter just provide them with more time to animate other things.

Lucas likens the transition from film to digital technology as going from fresco to oil painting. Fresco required a large team. It was labor intensive and limited; no room for corrections. But if you used oil paints, you could paint outside and, more important, you could paint over things that you didn’t like.

5:35 p.m.: On “Star Wars”: “I wanted a kinetic movie.” Lucas says the only real tech advance in “Star Wars” was the ability to pan over space ships.

5:40 p.m.: Lucas says “Jurassic Park” was the breakthrough point for digital effects. “That was the point that we realized we could digitally create things that looked real enough to fool people.”

Lucas says the movie-theater industry could save a billion dollars if it converted to digital-projection technologies. Kara asks why they haven’t. Lucas: “Hey, don’t ask me. I live in San Francisco, not Hollywood.”

5:45 p.m.On his move into television: Lucas says a big motivator is cost. He says he realized he could do 100 hours of TV for the cost of one two-hour film.

5:50 p.m. What do you think of Internet video? Lucas says there are two forms of entertainment: circus and art. Circus is random, he says: “feeding Christians to the lions”–or, he says, as the term in Hollywood goes–”throw a puppy on the highway. … You don’t have to write anything or really do anything. It’s voyeuristic.” In short, he says, it’s YouTube. Art is not random, Lucas says. “It’s storytelling. It’s insightful. It’s amusing.”

On Hollywood: “I view it as a means of distribution.” Of course, Lucas can afford to.

5:55 p.m. More wisdom from a pro: “The last thing you want to do is invest in the film business. The hedge fund guys want to, but they just want the producer credits and the girls. And there are cheaper ways of getting both.”

6 p.m. How will next summer’s release of the latest installment of “Indiana Jones” be? In a word: “Good.” Pause, then: “I haven’t started filming yet.”

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